Despite the recent troubles the HD DVD camp has had, specifically since “Blu-Friday”, this move by Netflix is a head scratcher. Why would a rental company limit the options their consumers could choose from?

Well I can think of a couple of reasons,
Right now Netflix is having to buy each movie in 3 different formats not only is that expensive for them it's causing other problems, for example, since they are having to buy 2 different formats of HDM movies there are fewer of them to rent, I've heard lots of Netflix customers complain about long waiting times for HDM movies.
With only 1 HDM format to buy they can have more of them in stock to ship out sooner to the customers.

Netflix is just doing what they see as being best for them, & it's not like they are the only ones abandoning hd-dvd.

Toshiba had better do something damn quick if they want to stay in the battle.